Global Market: Eurozone bond yields fall as tech stock selloff boosts safe-haven demand

Eurozone government bond yields fell on Tuesday, tracking a decline in US Treasury yields, as renewed turbulence in technology stocks prompted investors to seek the relative safety of government debt.

Germany's 10-year bond yield, the benchmark for the euro zone, dropped 5 basis points to 3.43%, while the two-year yield declined 3 basis points to 3.09%.

Yields fell as global technology stocks faced renewed pressure, reviving demand for safe-haven assets. South Korea's technology-heavy KOSPI index tumbled more than 5%, while Nasdaq 100 futures fell 0.7%, according to Reuters.


Read more: Global Market: South Korea’s Kospi plunges over 7% as chip stocks tumble on CXMT concerns

Bond markets have stabilised somewhat over the past several sessions, but investors remain cautious following a sharp selloff in late September and early October. During that period, Germany's 10-year yield climbed to 3.65%, its highest level since 2009.

The latest rally in government bonds extended across major markets. The benchmark 10-year US Treasury yield fell 6 basis points to 5.18%, while France's 10-year yield declined 5 basis points to 4.85%. Italy's equivalent yield slipped 3 basis points to 4.55%, Reuters reported.

French government bonds have been at the centre of recent market volatility as investors assess the country's fiscal outlook and political uncertainty ahead of next year's presidential election. Concerns that political manoeuvring could complicate government efforts to rein in the country's large budget deficit have weighed on French debt.

Read more: Global Market: Japan bond yields diverge as investors weigh inflation, BOJ outlook
The spread between French and German 10-year government bond yields, a key measure of the additional return investors demand to hold French debt rather than its German counterpart, stood at 140 basis points on Tuesday.

While the yield decline indicated renewed appetite for government bonds, persistent fiscal concerns and uncertainty over the global interest-rate outlook continue to leave bond markets vulnerable to further volatility.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)